At this time last year, there were two universal truths in residential real estate across the country. Whether or not sales were up in year-over-year comparisons, the market was assuredly active, and, thus, overall inventory was trending downward compared to the year before. That remained the case for the entirety of 2017, and that refrain sounds entirely familiar for the duration of 2018.

Residential real estate activity is in full swing across America. Some trends are persisting as they have week after week, month after month and now year after year. But some metrics are teasing a deviation from the norm. There may not be as many homes for sale as there were last year at this time, and home price increases are still more likely than not, but there is a chance that we could see more positive changes in either sales or new listings as the summer months progress.

According to the National Association of REALTORS®, existing home sales were down 2.5 percent for the nation as a whole in April. While local trends do not necessarily coincide with national trends, a holistic outlook can often explain the general state of feelings regarding residential real estate. Sales have been lower in year-over-year comparisons in the hottest submarkets due to low inventory and a speed to sale that is faster than the market can replenish itself.

Housing demand is strong and supply is low. That’s been the story for a few years. But there is some early evidence that things could be starting to loosen up. That said, buyers shopping this spring will still face stiff competition. The lack of inventory combined with rising prices is encouraging some sellers to stay put; however, the move up market offers a bit more inventory. This combined with historically low interest rates creates a perfect opportunity for homeowners looking to move up.

In April, sellers listed 7.2 percent fewer homes on the market—the sixth consecutive month of declines compared to a year ago. Largely due to the shortage, closed sales declined 5.2 percent compared to the prior year. For-sale housing inventory was 25.1 percent lower than April 2017. This shortage, which is particularly acute at the entry-level prices, has created a competitive environment where multiple offers and homes selling for over list price have become more common. Sellers are often receiving strong offers close to their original list price quickly, which can sometimes frustrate home buyers.

New construction closed sales rose 13.2 percent compared to last April. Although single family homes made up about 73.0 percent of all sales, townhomes and condos have seen stronger demand lately. Similarly, previously-owned homes made up about 90.0 percent of sales, but new construction showed a much stronger increase in pending and closed purchase activity. The average time on market is still 53 days, reminding sellers that they still need to stage and price their homes well.

April 2018 by the Numbers (compared to a year ago)
• Sellers listed 7,321 properties on the market, a 7.2 percent decrease
• Buyers closed on 4,635 homes, a 5.2 percent decrease
• Inventory levels for April fell 25.1 percent compared to 2017 to 8,958 units
• Months Supply of Inventory was down 25.0 percent to 1.8 months
• The Median Sales Price rose 8.6 percent to $266,000, a record high for April
• Cumulative Days on Market declined 10.2 percent to 53 days, on average (median of 18)
• Changes in Sales activity varied by market segment

Inventory and days on market both continue to skim along at historic lows, while buyer demand is creating competitive purchase offer situations that are increasing the number of homes sold for more than the asking price. This practice is nothing new in more popular areas, but higher offers are becoming normal outside of the hottest cities and neighborhoods. Affordability is a challenge for some potential buyers, yet prices still rise in an environment of economic confidence.

Year-over-year percentage changes for housing metrics like inventory, median sales price and days on market have sometimes looked dramatic over the past few years in most markets across the country not named Houston. But as faster sales and higher prices persist, another trend is beginning to emerge: reliability. Although more market balance is preferred, the current situation has proven to be surprisingly sustainable, at least for the time being.

As with last spring, the home-purchasing season will be competitive this year. Demand is still strong, especially in light of rising mortgage rates. Savvy consumers will want to get into a home before rates go up again. Amidst an environment of low inventory, buyers need to remain watchful of new listings and make their offers quickly.

After at least two years of hearing reports that both sellers and builders are gaining in confidence due to an expected positive return on investment, we are starting to see some upward movement in the New Listings metric locally and throughout the nation. Although there may not necessarily be positives from week to week, a longer-term improvement trend would not be a surprise at this point.

One begins to wonder just how long the housing market can work in the favor of sellers. Low inventory continues to create a competitive situation for buyers that has sales prices meeting asking prices and often going over for well-priced homes that show well. As long as buyers continue to form new households and feel financially confident within an inviting economy, this could be the state of residential real estate for quite some time.